Costs, SDLT and tax

LBTT and VAT on Scottish Commercial Property

PropertyVAT Team · Updated 21 October 2026 · 3 min read

Buyers who operate across the UK often assume the whole tax picture travels with them. Half of it does.

What is the same

VAT is a UK-wide tax. Everything about the VAT analysis applies in Scotland exactly as it does in England:

• Commercial property is exempt by default
• An option to tax makes it standard-rated at 20%
• New buildings are standard-rated regardless
• TOGC treatment can take a sale outside the scope of VAT
• Recovery depends on registration and taxable use

So the funding problem is identical. An opted Scottish office carries the same 20% at completion as an opted English one, with the same one-to-three-month wait for the reclaim.

What is different

The transaction tax. Scotland charges Land and Buildings Transaction Tax, administered by Revenue Scotland, rather than Stamp Duty Land Tax.

Rates and thresholds for LBTT are set separately and differ from the SDLT scale. They also change, so confirm the current bands with Revenue Scotland rather than relying on a figure from a guide.

The VAT point holds

The principle that catches people out in England applies in Scotland too: VAT forms part of the chargeable consideration.

So on an opted purchase, LBTT is calculated on the price plus the VAT. You recover the VAT; you do not recover the additional LBTT that the VAT caused.

That makes the TOGC question just as valuable north of the border. A successful transfer of a going concern removes the VAT from the consideration, and therefore the transaction tax on it.

The lease difference worth knowing

For non-residential leases, LBTT requires review returns during the term — further returns at intervals and on certain events, recalculating the liability.

SDLT has no direct equivalent for ongoing review in the same way. A tenant or landlord familiar only with the English regime can miss these, and they carry compliance consequences.

Where VAT is charged on rent, it is included in the net present value calculation, so an opted lease increases the LBTT as well as the rent.

And Wales

Wales is a third regime again: Land Transaction Tax, administered by the Welsh Revenue Authority, with its own rates and thresholds.

The VAT principle is consistent across all three. Nothing else reliably is.

Practical points for a Scottish purchase

1. Run the VAT analysis exactly as you would anywhere in the UK — option to tax, new building, TOGC.
2. Calculate LBTT, not SDLT, and on the VAT-inclusive figure.
3. Check current rates with Revenue Scotland rather than assuming.
4. Remember Scottish conveyancing differs — missives, and a different completion mechanic. Build the VAT funding timetable around the Scottish process, with a Scottish solicitor.
5. On leases, diarise the review returns.

The funding requirement is the same; the arithmetic around it is not. Budget the transaction tax under the right regime before you commit.

This guide is general information, not tax or legal advice. LBTT and LTT rates change — confirm the current position with Revenue Scotland or the Welsh Revenue Authority, and take Scottish legal advice on Scottish transactions.